To think a recession is looming?

[GrannyBloomers]

I was quoted £2 a litre for heating oil. £1000 for 500 litres, a matter of weeks ago it was roughly a quarter of the price.

Energy bills set to be £3k per annum - potentially more when a new price cap comes in in October.

Diesel near me is 171p and rising.

I'm in a 3 bed semi, nothing special. I need at least 1500 litres of oil a year (it runs the hot water too). That's say £3k. No gas but electric. I'm doing ok with cutting use = £1.5k per annum.

That's 4.5k at todays prices for household power. What will it be in October - 6k, 9k more?

This is before other costs increase - food will go up when the cost of storing it (refridgeration etc uses energy) and transport also increase.

If all the average person's income is spent on rent/mortgage/ bills and energy, then there's no money to spend on anything else. No eating out, no leisure, no holidays.

Surely a huge recession will follow.

And what if a much higher proportion of people need benefits?

@ancientgran
Wasn't in the housing market in 1973 but I bought in the London suburbs in 1988 and sold in 1995 for a little under 60% of the 1988 price. Knew several people who ended up having houses repossessed at the time Absolutely brutal...

But I do agree the housing market needs to be realistic, I feel for people trying to get on the ladder, and likewise for anyone that's completed during these crazy times, as some may see some minor negative equity if they drop a little But that's only if you see a house as an investment, not a home....

Definitely. We own a holiday lodge& Air Bnb business and bookings have dropped through the floor already. I guess some of this is because people can now go abroad again more easily but I think lots of people are not going to be able to afford a break at all.

@SpiderinaWingMirror

Nobody should hope for a house price crash. Its hell for those with negative equity and indicative of real problems in the economy.

Anyone who lived through the property crash at the end of the '80s and into the early 90s would never want to see another like it. Negative equity was just part of it, there were huge numbers of people who lost their homes and a massive number of repossessions.

I think there will be a recession, and I think house prices will stop rising like they have been as a result. FTBs will find it harder to save deposits as they will have less disposable income after paying their bills, so demand for properties is likely to fall.

A significant rise in interest rates could make it a different matter though. Most people are on fixed deals, so the impact would not be immediate, but when those fixed interest periods come to an end, they could find themselves paying a lot more. Some won't be able to afford it.

The size of the mortgages that many people have now and the historically low interest rates mean that a 0.5% rise could make a big difference to monthly payments, at the same time as everything else is going up. A 1% rate increase wasn't a massive difference when rates were 15% or even higher, but 1% more when you're only paying 2% is huge, relatively speaking.

Rate rises are the thing that could trigger a crash imo. Recession not so much.

[quote Grumpyoldpersonwithcats]@ancientgran
Wasn't in the housing market in 1973 but I bought in the London suburbs in 1988 and sold in 1995 for a little under 60% of the 1988 price. Knew several people who ended up having houses repossessed at the time Absolutely brutal...[/quote]
It is such a horrible feeling isn't it when you've worked so hard for something. We were panic buyers in 1973, we'd seen houses rising out of our reach and bought a wreck, it needed totally gutting. We had it rewired, new windows, new floors all through due to rot, new kitchen, new bathroom, decorated throughout. We sold in 1975 for £1,500 more than we paid for it so in reality we had lost several thousand.

We did have an escape in the 80s as DH was seconded to London for 2 years, we thought of buying there but in the end he had a free flat for the 2 years and we kept our house and I lived there with the kids and animals. We'd have lost massively if we'd gone ahead with the plan. Once bitten.

Timing is everything and you can't imagine it happening until it does.

@user1471428785

Definitely. We own a holiday lodge& Air Bnb business and bookings have dropped through the floor already. I guess some of this is because people can now go abroad again more easily but I think lots of people are not going to be able to afford a break at all.

And if you live in a seaside holiday area like we do lots of people think a free holiday is a good idea.

We need to downsize.

@Whammyyammy

But I do agree the housing market needs to be realistic, I feel for people trying to get on the ladder, and likewise for anyone that's completed during these crazy times, as some may see some minor negative equity if they drop a little But that's only if you see a house as an investment, not a home....

The trouble is if you need to move, maybe new job or maybe a growing family and you can't sell for less than your mortgage and you are trapped.

@Whammyyammy

I love MN, every time something happens there is going to be a recession and housing price crash, where we will all be buying 4 bed detached properties in the south for peanuts....brexit, covid, energy prices, war in Ukraine....🤣🤣

Housing won't crash.

We will just get low growth. 1-2% a year.

But we are definitely getting a recession.

@stripeyflowers

I think we need to face up it: we are going to endure the worse times have ever experienced in any of our lifetimes. Life will be immeasurably and inconceivably different from now on in. The year 2019 was our last and best year. There is no return to a preferred normal. Realism.

Gosh, I bet you're fun at parties!

Not entirely sure why people think house prices will crash.

The projected base rate for 2023 is 1.00%

That is not going to cause any crashes.

Negative equity was just part of it, there were huge numbers of people who lost their homes and a massive number of repossessions

It was brutal. I bought in 1991 and the agent thought I was mad because I wouldn’t look at repossessions. They were a significant proportion of property on the market then.

I am not sure if the UK will tip into a recession but it is definitely going to be harder for people who are close to or under the breadline. The coming rises in the essentials that you can not really cut back on e.g NI, gas and electricity standing charges, water rates. Plus the knockon effect from the invasion on already increasing food prices and car fuel, especially those who use their own vehicles to get to work.

If the UK does slide towards a recession, I think it is more likely to occur during 2023 following the winter of 2022 and only if it turns into a cold one, when people will have no choice but to use their heating systems.

I really worry about the impact on small businesses and the resulting unemployment. I work for a company that provides a "nice to have" but not essential product/service, and buy from many like it on a regular basis but those purchases will be the first thing I'll cut down on as bills keep going up. Not sure how independent bakeries, small shops, self-employed service providers etc. will survive.

I dont know if its going to dip onto recession but those of us who are making minimum wage or just above are going to be hit hard. My wages are rising by 17p an hour, but everything is rising at so much more than that. My only saving grace and the reason I still have some sanity left is that I am on a fixed rate mortgage deal, and a fixed energy deal.

I dont think its fair to wish for a house market crash. Who will benefit? Mortgages will be harder to come by so renters won't, and home owners will sit in negative equity which is soul destroying.

And I agree that the impact on small businesses will be huge. We have stopped eating out, have stopped going to the hairdresser, have cut back on birthday spending and trips out. Many,many people will be doing the same.

I work in the leisure industry, which at the moment is still very busy too busy I think.

fuel and rising energy prices will most certainly have an effect and I suspect quite a dramatic effect.

@Bonny00

Its going to get worse and little to do with Putin, I am from an ex soviet country with close friends in Ukraine and the problem there was Zelensky, putting his eggs in the US basket. We were occupied thanks to the West for 50 years, when the western countries were "booming" and same time genocide, deportations etc in the occupied countries.

Ukraine produces 40pcnt of Europes wheat, currently not much being sown there either, if Russia gets hold of the land whatever they get they look for Asian market. They too have cancelled Europe.

Europe is finished and Bojo follows WEF plan, read up on it, covid was part of the plan the goal is, no one owns anything, no cars, no houses, no holidays, rationed energy through "smart" meters etc.It was planned long before ukraine war.

Ah yes, the Tories, that well known Communist party

It's difficult to say as things are far more unequal since 08 so plenty won't be affected. However I would pay off any debt if you can.

@TravellingSpoon

I dont know if its going to dip onto recession but those of us who are making minimum wage or just above are going to be hit hard. My wages are rising by 17p an hour, but everything is rising at so much more than that. My only saving grace and the reason I still have some sanity left is that I am on a fixed rate mortgage deal, and a fixed energy deal.

I dont think its fair to wish for a house market crash. Who will benefit? Mortgages will be harder to come by so renters won't, and home owners will sit in negative equity which is soul destroying.

I think even people on quite good incomes are going to feel the pinch.

I got two letters today.

The first one was telling me that my pension is going up by £6 pw.The second one was telling me that my council tax is going up by £37 a month. Talk about giving with one hand and taking away with the other ...

And they're going to make working pensioners pay NI on their earnings, so that will cost me approx £28 a month.

Tbh the war is obviously not helping but this was coming before. Look at wage growth, the productivity & lack of investment in the economy despite high employment & ever increasing house prices. Too much reliance on QE has fucked things

I dont think its fair to wish for a house market crash. Who will benefit?

I never understand this point. I'm a homeowner & many homeowners celebrate ever increasing prices when they also don't benefit anyone.
Our economy is literally just based on house prices growth.

And they're going to make working pensioners pay NI on their earnings,

Why don't you think that's fair?

Rate rises are the thing that could trigger a crash imo. Recession not so much.

Agree & it won't be for a while yet, it will be when fixed deals start to come to an end & BTLs on interest only mortgages.

@Allelbowsandtoes

Very scary times at the minute. I've been wondering whether people will stop using their cars so much and move to other modes of transport - cycling, walking, buses etc. I cycle to work and traffic is horrendous where I live in Bristol. I appreciate that some people aren't able to walk or cycle, either due to mobility/kids/long commutes etc. But I suspect that as fuel prices continue to rise, a lot of people might start exploring alternative transport which could only be a good thing?

With our buses only running every 90 minutes, 8.30-5.30, Mon-Sat, no way will I be using public transport.

And the bus only takes me into town. If I want to go to another town, it's two buses each way. If I want to stay out past 5pm, it's drive home or a taxi.

It's all built on artificial money, i.e. the money pumped in, and still being pumped into the economy, paid for by printing money and borrowing. That's not sustainable

You're right it's not - mainly because it's the economics of the madhouse - but it's suited governments so far to paper over the cracks

And on house prices I'm not sure it's about folk "hoping for a crash", more that some are recognising there's only so long the bubble can last
Frankly I'm only waiting for some fool to suggest going down the Japanese route, where they pass mortgage debt onto the kids